Are you stuck trying to decide exactly when and where to invest in property? Proportion of Renters statistics may be your answer.
Don’t worry, you're not alone in trying to pick the best locations from over 15,000 suburbs countrywide. There are countless stories of property buyers finding their property market research overly time consuming and (after fighting off the biased property spruikers) they buy on emotion, only to regret this later as their portfolio stalls on one or two properties and costs them each month in negative gearing.
But there is a different way to pick the best areas for your budget using a proven method that relies on hard facts and very smart data-driven research technology.
It all starts with 8 powerful property market indicators that, together, calculate the gap in supply and demand (and therefore capital growth potential in every suburb) for you so you can get back to spending time with your friends and family knowing your property investment portfolio is working hard for you and not the other way around.
Let’s examine one of these 8 powerful property market indicators… Proportion of Renters.
(You can read the whole blog series by using the links in the '8 Supply-Demand Indicators' block)
8 CAPITAL GROWTH INDICATORS
What is Proportion of Renters?
Proportion of Renters is the percentage of renters (tenants) compared to owner-occupiers living in a suburb. For example, if a suburb has a population of 2,000 and 600 are tenants and 1,400 are owner-occupiers, then the Proportion of Renters would be 600 divided by 2,000 x 100 = 30%.
The lower this percentage figure, the less supply of property for rent. Why is this important? Well, owner-occupiers tend to take better care of their property than tenants or landlords… so a high proportion of owner-occupiers in an area (and a low Proportion of Renters) can positively influence property prices. Let’s face it, owner-occupiers are more likely to invest in structural or cosmetic improvements in their home, which ultimately raises the standard of the area. Landlords will not want to spend vast sums of money adding value to a rental property as it is purely a commercial venture, and tenants haggle over rent rates and tend to come and go.
Where you can get Proportion of Renters stats
You can get Proportion of Renters data from the Australian Bureau of Statistics.
But collating and comparing this data for 15,000 suburbs is obviously a challenge even for the Excel spreadsheet data scientist in all of us.
Of course, we have made this easy for you with our suburb research tool, Boomscore! Check the Proportion of Renters for 15,000+ suburbs split by units and houses in Boomscore’s Suburb Profiler. Who knows, if all the other indicators support a low Proportion of Renters figure, then you may be the first to spot a suburb set to Boom.
BOOMSCORE - BIG DATA & ARTIFICIAL INTELLIGENCE (AI)
Big data and AI capability makes it possible for the Boomscore capital growth calculator to crunch the data for each of the 15,000 Australian property markets. A task few could do manually even if they knew how. Boomscore simply means you can now find safer locations where prices are most likely to increase faster. Over the past 10 years, Boomscore’s data algorithms have outperformed the ‘hotspot’ picks of some of the more recognised property market research gurus. In fact my (then) 6 year old daughter showed them how easily it’s done using just a few clicks on Boomscore (read how).
Boomscore rates every suburb (by house or unit) out of 100 based on how they perform across the 8 supply-demand indicators in this series. The higher the Boomscore, the more demand exceeds supply, which greatly increases the probability of property value rises in that location for that property type. Get Boomscore.
But be careful with Proportion of Renters ...
The Australian Bureau of Statistics gets this detail from the five yearly Census we all complete... so it could be unreliable, if not entered correctly by the public, or out of date if it has been a while since it was collected.
You can double check the data by cross-checking with the property portals and working out the properties available for rent as a percentage of the number of properties available for sale in the area. This percentage and the Proportion of Renters should be similar.
In closing ...
Property prices, and therefore capital growth potential, are influenced by a number of factors. If you understand these factors and how to work with the capital growth indicators available to you, then there is no reason why you can't find the best investment locations to suit your strategy.
There are 15,000 suburbs in Australia - that’s 30,000 property markets (if you take into account the Unit and House markets in each suburb). Despite what the macro property market is doing, there are always viable micro markets out there… and it may come down to one particular street in one particular suburb. In order to find these nugget suburbs you need to compare the data for all 15,000 suburbs (and 30,000 markets) against one another to rank order them and let the cream of the crop float to the surface. And to crunch the numbers you need to have a good understanding of the importance of the data and how to work with it to find or track your chosen suburbs.
If any of our blogs on the subject have peaked your interest, you can download our Free Essential Guide to Property Market Research, or attend our in-depth (but affordably priced) online property research training course (coming soon ~ register your interest now!). And we encourage you to use Boomscore, our tried and tested suburb ranking tool to get you started.
Read next blog ... Find out how a 6 year old girl used Boomscore to beat the so-called experts property market predictions.